Uber Technologies Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2023

There are 10 speakers on the call.

Operator

Good morning, and welcome to the Nomad Foods First Quarter 2023 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Anthony Dukalu, Head of Investor Relations.

Operator

Please go ahead.

Speaker 1

Hello, and welcome to the Nomad Foods First Quarter 2023 Earnings Call. I'm Anthony Pukalo, Head of Investor Relations. And I'm joined on the call by Stephane de Scheermaker, our CEO and Sami Zekout, our CFO. Before we begin, I would like to draw your attention to the disclaimer on Slide 2 of our This conference call may include forward looking statements that are based on our view of the company's prospects, expectations and intentions at this time. Actual results may differ due to risks and uncertainties, which are discussed in our press release, our filings with the SEC and this slide in our investor presentation, which includes cautionary language.

Speaker 1

We will also discuss non IFRS financial measures during the call today. These non IFRS financial measures should not be considered a replacement for and should be read together with IFRS results. Users can find the IFRS to non IFRS Reconciliations within our earnings release and in the appendices at the end of the slide presentation available on our website. Please note that certain financial information within this presentation represent adjusted figures for 2021 2022. All adjusted figures have been adjusted for exceptional items, acquisition related costs, share based payments and related expenses, as well as non cash FX gains or losses.

Speaker 1

Unless otherwise noted, comments from here on will refer to those adjusted numbers. With that, I will hand you over to Stephane.

Speaker 2

Thank you, Tony, and thank you for joining us on the call today. Nomad had a solid start to the year as our sales momentum from the 2nd half of last year continued in the Q1. Additionally, our teams did an excellent job executing the strategies we announced at CAGNY in February. I'm pleased with the performance of the great people across Nomad who delivered excellent results to start the year off right. Last year, we faced a difficult environment brought on by post COVID inflation and the outbreak of the Ukraine war.

Speaker 2

We adapted to confront these challenges last year and put new plans in place this year to make NoMad even more resilient and positioned for growth. Overall, we believe our Q1 results demonstrate that we are on the right path to accomplish our goals. In Q1, Our revenues grew organically 8%, another sequential quarter of improving sales trends. The benefits of our pricing strategy Supply Chain Management were visible in improving adjusted gross margin and EBITDA margin, both of which Grew 100 basis points year on year. We also delivered adjusted EPS of €0.46 which grew 7% in the quarter.

Speaker 2

As we shared at CAGNY in February, we have 3 central priorities for this year. Our first priority is to strengthen our commercial approach With additional A and P investments for our brands, while adding affordability options for stressed consumers. This includes not just innovation, but renovation for many of our best selling products. Our second priority is to leverage the efficient savings From a world class supply chain to health fund growth, our final priority is execution of our revenue growth management strategy Designed to recoup costs through pricing and maximize the value of our portfolio. I'm happy to say we are on course for all three.

Speaker 2

Our new A and P investment is reaching the market now in Q2 and will be fully deployed in the 3rd and 4th quarters. Our supply chain is performing well, delivering excellent service and efficiently managing our procurement process. Finally, our revenue growth management execution is helping drive price and mix further narrowing our cost gaps. Overall, Nomad is in a much better position today than at this time last year. We are highly encouraged by the resilience of our top line and the improvement in our margins.

Speaker 2

2023 will have its challenges, With our improving fundamentals and expected step up in cash flow and strengthening balance sheet, we are highly optimistic about this year And beyond. We are on track to meet our guidance expectations. With that, I'd like to recap our Q1 key financial metrics, Beginning with revenues. Q1 revenues grew 5.8% with strong pricing more than offsetting volume declines. Organic sales grew 8%.

Speaker 2

However, we experienced 2.2 percentage points of negative ForEx impact. Adjusted gross margins Grew 100 basis points to 28.9 percent driven by our pricing initiatives and supply chain execution. Adjusted EBITDA grew 11% to €146,000,000 with margin improving 100 basis points. And finally, adjusted EPS was €0.46 per share, up 7% versus last year. At current U.

Speaker 2

S. Dollar spot rates, Our Q1 adjusted EPS was €0.51 Our revenue performance was strong in the first quarter as our pricing from the second half of twenty twenty two Rolled over into the start of the year. This was the 4th sequential quarter of improving organic sales trends against the challenging consumer environment. Our mid teen pricing more than offset the mid single digit volume decline as our volume impacted by elasticity and price gaps With competition, we have further narrowed the gap between our price and input costs this quarter with a positive margin expansion. Raw material prices are moderating.

Speaker 2

However, we are not seeing meaningful deflation. It is our plan to recoup our input cost inflation from 20222023 by year end. This will help fund our plans for stepped up investments in A and P and innovation. This is crucial for the health of our business. Our world class supply chain continues to show positive results.

Speaker 2

We delivered service to our customers at a multi year high With level above 97%, up 100 basis points from last year. Additionally, we remain disciplined on procurement And we are covered for nearly 80% of materials for the year. We're giving ourselves more flexibility on coverage than in previous years, Becoming more analytical and strategic on how we acquire raw materials. We lost about 1% value share this quarter. This loss was a direct impact of both elasticity in the price gaps which have not yet narrowed versus our private label competition.

Speaker 2

However, our new A and P investments hit the market starting late in Q2 and will be running out across the balance of the year. With greater brand support and innovation, we expect to reverse these losses as the year progresses. Finally, with our strong EPS delivery this quarter, we are raising the lower end of our 2023 adjusted EPS guidance to €1.52 from €1.50 Our original range of €1.50 to €1.55 now stands at €1.52 to €1.55 This represents an adjusted EPS range of $1.67 to $1.71 at current U. S. Dollar spot rates and excludes any impact Of capital allocation.

Speaker 2

This quarter, we benefited from the adjustments we made to our business model last combined with the new plans we have rolled out this year. We plan to return to our historic margins over time and we made progress during the quarter. In Q1, margins benefited from our pricing from the second half of twenty twenty two. Additionally, we showed the benefits of supply discipline and cost savings programs. As a result, our gross margin expanded organically for the first time since the end of 2020.

Speaker 2

With our continued focus on price realization and supply chain discipline, these good early starts This is on target to meet our goal of flat adjusted gross margins for 2023. The consumer We are the center of everything we do and we kicked off our 4 dbt strategy designs with track and retain consumers during this period of high inflation across Europe. We have adjusted many of our promotions on key items in selective markets to keep consumers in our portfolio. Additionally, our expanded above and below the line communication strategies are carrying the message of frozen food intrinsic values, Including lower waste, high nutrition, product versatility and good value. We are seeing strong initial evidence that our message is taking root.

Speaker 2

Long term, we think the strategy The opportunity to reconnect with consumers and strengthen loyalty to our brands. Finally, we're seeing the full benefits of the Plant fish supply strategy we accelerated after the outbreak of the Ukraine roll last year. With our new source of fish, We launched new and innovative products across 4 of our markets including the UK, Germany, the Netherlands and France. We have a scheduled expansion into at least another 3 new markets this year. Initial results have been very encouraging And we are excited by innovation opportunities, the new supply of high quality fish providers.

Speaker 2

With that, I will now hand the call over to Sami to review our financial results and guidance in more detail. Sami?

Speaker 3

Thank you, Stefan, and thank you all for your Turning to Slide 6, I will provide more detail on our key first quarter operating metrics, Beginning with reported revenues, which increased 5.8 percent to €775,000,000 8% organically. 1st quarter revenues were negatively impacted by 2.2% of unfavorable effects. We saw elasticity in our top line performance as volumes came under pressure due to price increases and the persistent price gap with private label. These volume declines were expected and are in line with expectations as we aim to recover cumulative cost increases from last year and this year. These volume declines impacted our market share, which was up about 1 point for the quarter.

Speaker 3

As we communicated at CAGNY, we expect market share trends to improve sequentially this year, driven by our innovation efforts On affordability as well as stepped up A and P investments, we delivered a strong margin performance this quarter. Adjusted gross margin was 28.9%, a 100 basis points increase versus the prior year, reflecting the successful recovery of higher input costs through pricing. We continue to navigate an inflationary environment. In Q1, we saw a benefit in the cost of goods sold from the tail end of cover position from 2022. Looking ahead, while we have strong cover now in place for the rest of 2023, the full effect of inflationary impact on COGS will be realized as the year progresses.

Speaker 3

As we look out to the rest of the year, we expect to deliver flat gross margins supported by price increases and cost discipline. Moving down to the rest of the P and L. Our adjusted gross profit grew 10% to €224,000,000 for the Q1. Adjusted COGS increased to €551,000,000 an increase of 4.3 percent, €23,000,000 versus last year. Adjusted operating expense of €100,000,000 was up 6% year over year.

Speaker 3

Adjusted EBITDA of €146,000,000 was up 11% the start year. Adjusted EBITDA margin landed at 18.9%, an increase of 100 basis points. Finally, adjusted EPS of €0.46 was up 7% in Q1. This translates into $0.51 in U. S.

Speaker 3

Dollar term as spot rates. Turning to cash flow on Slide 7. Cash generation is crucial to the health of our business and remains the top priority as we consider capital allocation for this year and beyond. In Q1, we generated €25,000,000 of adjusted free cash flow for a conversion ratio of 32%, That is 62% in Q1 2022. Q1 was adversely impacted by the phasing of inventory, Receivables and payables in certain markets during the quarter.

Speaker 3

The adverse phasing of receivable and payables is temporary It should reverse in Q2. We remain on target for our 2023 cash flow guidance and our options for Capital allocation remains wide open. CapEx of €21,000,000 was flat versus last year. We continue to support strategic investments in the business. Changes in cash tax increased €1,000,000 to €10,000,000 While cash interest was down €2,000,000 to €25,000,000 As part of our refinancing in November 2022, We will be facing higher cash interest payments on a portion of our debt.

Speaker 3

As a result, we saw cash benefit in Q1 before realizing the full impact of higher interest charges in Q2. Last year, our cash generation was negatively impacted by a working capital build To mitigate the possibility of supply shortages in the middle of the year, we are also impacted by the implementation of On the fair trade practice directed UTPD in the EU, this year with more normalized inventory level And new CPD in the base, we expect cash flow conversion in line with our historical average. With that, let's turn to Slide 8 To review our 2023 guidance, which we initiated in our 2022 earnings report in February and are updating today. This guidance is based on foreign exchange rates as of May 3, 2023. We are updating the original guidance we delivered in our 2022 year end earnings report.

Speaker 3

First, we expect organic revenue growth to be in the mid single digit range for 2023. We expect our pricing initiative to more than offset volume declines. We expect cash flow to be in line with our historical performance. With working capital and UTPD in the base, we expect our cash conversion ratio in the range of 90% to 95%, In line with historical averages, we are raising the bottom end of our projected 2023 guidance. We now expect adjusted EPS in the range of €1.52 to €1.55 per share or $1.67 to $1.71 at current USD spot rates.

Speaker 3

This replaces our original guidance of €1.50 to €1.55 and excludes any impact of capital allocation. I will now turn the session over to Q and A. Operator, back to you.

Operator

We will now begin the question and answer session. Our first question will come from Jason English with Goldman Sachs. You may now go ahead.

Speaker 4

Hey, good morning folks or perhaps it's good afternoon where you're at. A couple of quick questions. You mentioned, I think Stephan, this is in your comments, you plan to recoup the inflation incurred in 20222023 collectively by year end. My question is how? Are you expecting to have more list price increases?

Speaker 4

Or I believe you've tapered some trade on top of increases is the anticipation that you'll be able to pull back on some of that trade to get more effectively net price realization by year end?

Speaker 2

Well, it's a bit of a combination of everything to your point. The first piece, Ginn, we are well embarked in terms of recovering the Don't forget to know that it's something which is obviously started last year. So we have obviously the positive impact of 2022. We already had some negotiation positive negotiations early this year. So what's left is much lower.

Speaker 2

And don't forget at the same time The inflation, input cost inflation has somewhat decelerated in the meantime, which is Probably deceleration is probably higher or better than anticipated, which helps us as well. So that's the piece, that's the macro piece where we stand. So yes, we're still left with some here and there, some negotiation, But it's nothing comparable to what we had last year. And then with that, obviously, you're going to the consumers. Consumer is about obviously promo and all these things.

Speaker 2

And so it's much more about revenue growth management and it's really it has really become A big and it's becoming more and more a big muscle for us right now and also for the coming months years. So that's where we stand, but maybe I can you can compliment, Sami.

Speaker 3

Yes, Stefan, I think you said most of it. The one thing, Jason, I would insist on is actually The pressure for the coming quarters is actually much lower than what we have planned given what has been executed so far And what we are seeing from an inflation trend, Stephane was alluded to the point of let's say revenue growth management strategy, which we are really now leveraging full speed across the market To really make sure that we execute some of these intervention, if you want, on let's say, in the right market and in the right category To remain competitive versus the rest of the market as well. So clearly, we are on trend if not a bit better on that.

Speaker 4

Okay. And you also commented in prepared remarks that private label gaps have not yet narrowed. Is that like they haven't yet narrowed All the way back, are they narrowing? But just, are you seeing progress on that front? I guess it's the core of my question.

Speaker 4

And with the cost pressure Perhaps moderating a bit, does that influence your expectations of how far you expect private label to go in closing those gaps?

Speaker 2

Well, it's a complicated question, Jason, because obviously, it's not it's other people. So we can't second guess what they're going to do. The only thing we can say is, we all subject to the same, let's say, constraints. The market is the market, the fish is the fish, The divestables are the best of all. So our decision was and it still is by the way to make sure as brand players, as brand leader, We want to obviously maintain our gross margin, so as to be able to reinvest.

Speaker 2

That's the very essence of a brand leader, and that's what we're going to do. What other people might decide to do with their margin is something else. We haven't seen overall yet a very Significant narrowing down of the difference. It may come, may not come, but probably you should ask them at some stage.

Speaker 4

Indeed. If I get a hold of my well.

Speaker 5

Thank you very much. I'll pass it on.

Speaker 3

Thank you, Jason.

Operator

Our next question will come from John Baumgartner with Mizuho Securities. You may now go ahead.

Speaker 5

Good morning. Thanks for the question.

Speaker 2

Hey, John. Hi, John.

Speaker 5

Maybe first off, wanted to walk through the Fort Inova As we're heading into the peak season there and especially as you're lapping a tough comp on the revenue side, are there any fundamental or structural improvements or And since you can highlight, that you've implemented that are poised to benefit operations this year on the revenue side?

Speaker 2

Well, to your point, last year was a really great year. And believe me, we have all the intent to have another great year this year, With or without the weather. I think the other thing that we are very much in line with the business model, by the way, we've improved. So first, you have a huge, Let's say, number of freezers in some way or dated and as expected, we're improving all these freezers. I think it's Mamori is right.

Speaker 2

You have around 120,000 freezers across the order region, which is a great route to market, as you can imagine, And some had to be some way outdated and as expected we're changing them, which is great and is going to help us And with the retailers and with the consumers. That's the first piece. The second piece is we're also improving, let's say, the quality of the factories. That was also part of the plan. And the 3rd piece, which is something we have learned since last year is you probably need To be already on time, more already on time in terms of inventory of finished goods Because it's another game vis a vis frozen food.

Speaker 2

So you have to make sure that you're going to be ready, let's say, Q1 or even Q4, Q1. Q2, to deliver. It's quite different from frozen food. You just can't rely on Q2 and Q3 to deliver your ice cream. Last year, we had some out of stocks because we hadn't fully grasped that piece and obviously we're learning.

Speaker 2

And so that's the 3rd piece of improvement that we are coming up with. On top of that, the team is Well, the team is great with the Adriatic. They're doing a fantastic job. They've come up with a new taste, Considered as among the best ice cream in the world and it's yes, it's going to come. By the way, we also I have opened a new avenue in terms of exports, let's say, to Austria, where you have a very Size of our community of crafts there, especially in Vienna.

Speaker 2

And as you know, we have a very strong distribution in this country. And so if you go to Vienna, I would invite you to go to some of the stores there, for example, spa. It's not advertising here, And then you will see some of the later products. And it's we're very confident it's going to do well. So yes, very pleased with what we have, qualitatively and quantitatively.

Speaker 6

Okay. Thanks for that, Stephane.

Speaker 5

And then just a follow-up. I wanted to ask about the A and P Your categories, I wouldn't say are impulse oriented. And I'm curious how long you think it might take to convert your investments And are there specific programs you're targeting that you're more optimistic and deliver a reasonably fast payback, whether it's Trade or messaging, just any perspectives on programming would be helpful. Thank you.

Speaker 3

Yes. I think we have communicated, John, on our Clear intent to step up our investment in NP. As you have seen, I mean, over the past years, we had taken it down really by To optimize your whole portfolio, but it's about time that we reinvest behind the assets that we have. And I think that there are a number of things that We are really doing now, which is refueling effectively the level of spending behind our midstream battles. We do know that when we invest there, the The payback is quite fast and it's strong because the brands are quite strong.

Speaker 3

But nevertheless, given the fact that the trend has been a bit down over the past years, it's just going to take a bit more time than usual. But clearly that builds up if you have sustainable growth as we move forward. Investing effectively around equity, I mean, is very important. The is a perfect example of that. We are clearly refueling effect our investment, I mean, there.

Speaker 3

And what pays back a bit faster, sometimes it's frankly more innovation driven, More effective targeted to, let's say, coordination between in store and equity investments when we try to have a bit of a holistic KNP intervention there, where we see Faster returns, usually within the 9 to 12 month ish, whereas if you're the classic advertising On the longer payout there, but we're clearly trying to balance the need for reinvesting behind must win battles that are absolutely critical to bring them back On par with what is making growth strong and profitable and on top trying to leverage any commercial option related to market dynamics. For instance, Let's say clearly cost of living intervention or innovation intervention or other limit. When we have Basar as an example coming up, of course, we'll advertise that and that has Clear return, I mean, much faster than others.

Speaker 2

And you will see set of investments starting really end of Q2

Operator

Our next question will come from Peter Saleh with BTIG. You may now go ahead.

Speaker 7

Great. Thanks for taking the question. I just wanted to ask on the pricing plans. I know you had a mid teens pricing in the 1st quarter here, how should we think about your pricing for the balance of the year? Do you anticipate At this point in time, taking any additional price given you haven't really seen any deflation, maybe some just moderation in Commodities, just trying to understand how you're thinking about the pricing lever for the balance of this year?

Speaker 3

Yes. As we said earlier, the pricing, if you want, that is going to come is actually much less than what we had originally planned for, for the reason That's actually our first tranche that has happened in GSM has gone really well and has passed through. And On top of that, if you want, we see, let's say, a lower pressure on inflation that is putting, if you want, the coming burden on the need to recover inflation through Lower than planned. So clearly at this very stage, it's definitely within a range of pricing intervention that will be much more moderate over the quarters As we see further, we will be very specific because this inflation hits different category in different market at a different level. And we'll try to make sure that the effective will go where it makes sense with the intent as well of taking advantage from an inflation standpoint on the fact that we are Hedge at about 80% as we indicated and we have 20% unhedged and on this unhedged part we intend to clearly leverage any Positive or positive in the market in case we have access to input cost at a lower price, which will reduce the pressure for pricing in the next quarters.

Speaker 3

So clearly, On par if not ahead and at this stage much more manageable as we move forward.

Speaker 7

Great. Thank you very much.

Operator

Our next question will come from Cody Ross with UBS. You may now go ahead. Good morning.

Speaker 6

This is Simon Nagans filling in for Terry Ross.

Speaker 3

Okay. Hi, Simon. Hey there.

Speaker 6

You haven't repurchased shares since Q1 of last year as you focused on securing inventory. When do you anticipate share repurchases being a bigger part of the capital allocation process again?

Speaker 3

Well, we definitely, I mean consider share repurchase as part of our capital allocation strategy as we have mentioned many times. The focus over the Q1 was To stabilize the business as we are clearly getting into, let's say, inventory and receivable at the time, Management at the time we're executing pricing and securing the supply. As now we're getting out of this, let's say, clear transition quarter now. We clearly have the next quarter to look at different options, I mean, appealing to us, whether this is effective share repurchase or other capital allocation strategy, but share repurchase We remain very high on our agenda and we've been opportunistic on that. And as market goes, we will effectively execute our strategy as we move forward on that.

Speaker 8

Great. Thanks so much.

Operator

Our next question will come from Steve Powers with Deutsche Bank. You may now go ahead.

Speaker 9

Hey, good afternoon. I wanted to ask about your Manufacturing savings that you had you target to step up in manufacturing savings entering 2023. And I just want to get A status check on progress there, how much you've already started to receive and that we've seen in the Q1 results versus how much Is yet to build over the balance of the year?

Speaker 3

Yes, definitely the program is in place. We had different taxes If you want, our development there is one was the pure manufacturing efficiency in the different sites that we had, Clearly, leveraging all the opportunities to implement our lean program activities in order to clearly reduce the conversion cost overall, Taking into account the volume dynamic as much as effectively the utility and the efficiency dynamic, the productivity dynamic that we have, The program is well in place and delivering each of good saving in line with the plan and it is a well spread plan over the quarter. So what you see In quarter 1, you're going to spread over the coming quarter. There was another range of intervention that we had made, which was more geared on product formulation And it's your ability to meet the market needs in a very effective way. And within that plan, we have made some of the intervention That are gradually being implemented and you can understand that whenever we touch products, we touch different parameters such as packaging Go to market and pricing and others and those are being deployed as we go.

Speaker 3

But very clearly the investment and the focus is in there. Great team there that is implementing that. The inflation, as we said, I mean, is clearly going on the right trend. I mean, at this stage, and we have taken opportunity The market opening to get half to have access to input costs at a lower price. And so the selling flow is coming as planned And is reflected effectively on our overall performance as we move forward in line with our expectation.

Speaker 2

On top of that, I'd also add logistics. Yes, absolutely. Where we're making a lot of progress savings and still a lot of opportunities ahead of us.

Speaker 9

Okay. That's helpful. Maybe if I could, the other you'd also communicated at CAGNY relatively sizable step up In innovation spending. And I guess similar question, how much of that have we already seen? How much of that is yet to come?

Speaker 9

And just any early feedback on sort of the return expectations on that investment?

Speaker 2

Well, the first one, as you may know, Steve, is about Baza or Spangazus in Continental Europe. It came out of necessity Last year was obviously the outbreak of the Ukraine war, but we've really moved from necessity to an opportunity for us. And so since something like end of Q3 last year, we really started to develop that part Of the new business, which is FanFish, which is great by the way, the product is great. And now we have developed And launched Basa in 4 countries Netherlands, UK, Germany and France. And it's doing well.

Speaker 2

We're making a lot of progress. We're planning to have another 3 countries by the end of the year. And that's innovation because it doesn't replace new products. It doesn't replace card or Pollock. It's really something new And that's a big innovation.

Speaker 2

The second piece is more about affordability and we also have some very interesting, Let's say, new innovations, especially in fish. So these are the 2 the first two pieces where we have invested more to come. But let's say and one thing interesting as well, you may say it's innovation or not innovation, but the pizza in France, We were not present in France. We think we have the right reason to be present with Pizza in France. We have the right distribution.

Speaker 2

Goodfella is a great product. And let's face it, for reasons that are, let's say, linked to competition, There was a big white space available there. And we've seen we've we had the conversation with the retailers And they're very open and then we have now you can see Goodfella's Pizza with Cafu, for example, in France and in other with other retailers. So that is also innovation. I love this innovation because they don't cost anything by the way because it's available.

Speaker 2

It's there, just not present in that specific country, which is great. The other piece is, especially doing this Cost of inflation cost of living crisis is renovation. I think the big piece for us Is to make sure our products, our brand products are going to come up with security in terms of packaging, in terms of pace and all these things. And that's short term and mid term. That's absolutely critical for us.

Speaker 2

So these are the big pieces where we have invested. More to come obviously Before, let's say, in the coming months for 2024 and onwards, but these are the big themes we think are very much adapted

Speaker 9

Very helpful. Thank you very much.

Operator

Our next question will come from Rob Dickerson with Jefferies. You may now go ahead.

Speaker 8

Great. Thanks so much. Apologies if Jardi went through all this and hopped on late. So just the kind of question around trade spending promo kind of vis a vis the gross margin clearly in Q1 gross margin was great. I think originally coming out of Q4 you had said, there would be like a sequential progression in gross margin.

Speaker 8

Right now, gross margin is still flat, so it doesn't seem like there's probably sequential progression really still occurring because a lot of it was front end loaded. Do you feel like kind of where you see the marketplace today, kind of what you had budgeted, I guess in Trinity promo, kind of is steady or do you think you might need a little extra room kind of as you get through the year Maybe lean in to make sure you're getting the velocities. And again, just asking kind of as it pertains to the kind of the delta in the gross margin flow. That's it. Thanks so much.

Speaker 3

Yes. Hi, Rob. Yes, it's very much in line frankly with what we're expecting. I mean, the one thing though that we have Looked at more thoroughly in the context that we've been facing with a good quarter behind us is effectively whether looking at our revenue growth management Strategy whether there could be some surgical intervention to be made on some key country category combination where we are clearly Running behind from a share momentum standpoint and looking at opportunities to do so. Don't expect if you want moving forward Massive change there, but much more targeted intervention to really, let's say, maintain a price gap That is, let's say, conducive of growth overall or potentially opportunity to reignite growth in some of the category where clearly we've taken pricing and where clearly we may have to be More competitive promo wise.

Speaker 3

This continues to remain the category that is heavily promotion driven. We clearly have a very Strong promotional plan, I mean, across the rest of the in the vast majority of the market. But wherever we have opportunity to be more surgical To ignite a stronger growth and regain share momentum, definitely we look at that. But as I said, it's going to be more on a country by country, category by category basis.

Speaker 8

Okay, great. And maybe just a quick clarification follow-up. When you talk about the strategic Pricing kind of depends on end market positioning. Is that kind of away from FortNova? Now just think of Kind of handheld ice cream in Eastern Europe at the beach, like people are probably buying on promo.

Speaker 8

So it's really you're kind of talking more about Those core categories really more frozen fish, frozen veg maybe. Is that right?

Speaker 2

Yes, we will look at We'll look

Speaker 3

at that. I mean, unfortunately, we have actually started the work as well to see if there were opportunities there, more on the growth side, Profitable growth side than anything, but I would say the majority of the emphasis on the more core categories is the non ice cream category.

Speaker 8

All right, great. Thanks, Jamie.

Speaker 3

Thanks.

Operator

Our next question will come from Jon Tanwanteng with CJS Securities. You may now go ahead.

Speaker 6

Hi, good morning. Thank you for taking my questions and congrats on the strong results. Sami, I didn't know if you addressed this previously, but did you mention how you're I think gross margins to trend through the quarters. Just on a cadence perspective, is there anything different from your normal seasonality? Or are there some puts and takes that we should be thinking about?

Speaker 3

No. We maintain the guidance, which is effectively about flat margin, I mean, for the year. The bump we had in Q1 was And it's going to then effectively deliver I mean, it's going to lead us to deliver in line with expectation on that.

Speaker 6

Okay, Great. And can you give us an update by region what you're seeing if there's been any surprise in any of your end markets? I know there's been protests in France that have been fairly disruptive to other industries. Just tell me if there's anything that's surprising either good or bad in the countries that you're in.

Speaker 3

No, I would say nothing if you don't have a I mean pretty much in line with the expectation if you want on that one. We never we had actually great customer service and in performance I mean overall. And the spread of the performance over the quarter has been consistent with our expectation as it shows if you want on the gradual share development that you see, but nothing No.

Speaker 2

They're different, let's say, region by region by definition, but they're not they haven't come up with any surprise region by region.

Speaker 6

Okay, great. And then last one for me. Can you give us an update on Green Cuisine? Number 1, how that's doing? And number 2, just how your sustainability initiatives, which You've had a lot of and talked about a lot of them.

Speaker 6

How has those been received by your retail partners and your consumers, your end consumers? Is that something that even comes up on the radar in times of stress budget? And is that something you're pushing? Just to help us understand where your positioning is on the front.

Speaker 2

Let me start with 2 questions actually, John, if I understand you well. The first one is about green cuisine. Actually, in terms of green cuisine, last year, To your point, I mean, we had a flat sales in the category declining by 9%. So to your point, I think we I mean, we have a share gain of 2%, which is we are the number 2 player in frozen food plant protein. This year so we're growing faster than the others.

Speaker 2

This year, we're up slightly in terms of market share With a country like Germany performing extremely well, growing at 10% and share up 10%. Italy is up as well. So overall, we're very pleased. This being said, when you take I think when you take the category, so it's a very I think category and we really believe that the category has a long term role to play. But I think what we also have seen After a lot of excitement, people started to reconsider, their habit needs to change, which is not unusual by the way.

Speaker 2

I think a lot of categories have been through that kind of I've been through that kind of strength. And I think it's up to us leaders to win the game and to come up with the right products, The right combinations, the right price. And so do I believe that there is a long term future? As I said, yes. Well, definitely, I think the consumers remind us, all of us, by the way, much more than others, all for others, by the way, That you know, it's never take people for granted, which is great.

Speaker 2

That's exactly what we need to do. In terms of sustainability, Well, we've just released our sustainability report. I think it is today. And I would really invite you, John, to Go through at the very least of headlines. Well, it is really strong when you see the numbers we have In terms of, let's say, for example, sustainable fish, in terms of sustainable agriculture, In terms of healthy food, in terms of SBTI, quite frankly, it's something we can well, I'm not saying that lightly, by the way, because I'm more of them easily dissatisfied, but it's really impressive.

Speaker 2

So back to your point about how does it sell then, well, I can tell you, the retailers, starting with the retailers, they also have their programs And they need people like us to come with programs that are very much in line Because they have also their carbon footprint programs and all the rest of it. And they need, obviously, to have a conciliatory view. So with people like us, I can say, I will not mention any names, but I can tell you we have a very, very solid conversation, very fruitful, let's say, conversation With some of these retailers, and I think it's only starting. As far as the consumers, that's what we Talking about the consumers, I think we can do more. We can do better.

Speaker 2

I think when I again, when I see the numbers, the numbers we have, I think that we need to do ourselves a better job. That's my non satisfactory part of my sales that is coming back, Where we can do a better job at coming with these numbers, because these are facts. You know that we We performed extremely well with, for example, Wall Street in terms of where we stand in terms of sustainability, but more to come. Quite frankly, I think we are too modest, too modest from that standpoint, given the fact we are coming up with. But it will change, I can tell you.

Speaker 2

And through the satisfaction of the retailers, the consumers and ultimately to our satisfaction.

Speaker 6

Got it. Thank you. Thank you very much, Devan. It's very helpful.

Speaker 2

Please read the report. It's really interesting.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Stephane Desschmaker for any closing remarks.

Speaker 2

Thank you, operator, and thank you for your participation on today's call. We got off to a solid start for the year and we remain on track to deliver our promises. We believe frozen food Remains the best value for consumer across food and we remain pro category leaders. We are focused committed to delivering our ambitious financial objectives for 2023 and beyond. Thank you all.

Speaker 2

Operating back to you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Uber Technologies Q1 2023
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